Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Table of Contents
Overview ......................................................................................................................................... 2
Introduction ................................................................................................................................. 2
Procedures ....................................................................................................................................... 2
Discontinuing Semi-Monthly Pay .............................................................................................. 2
Political Appointee Severance Payments.................................................................................... 2
Involuntary Separation Severance Payments .............................................................................. 2
Severance Benefits Deductions................................................................................................... 3
Final Payments ............................................................................................................................ 5
Leave Balances ........................................................................................................................... 5
Terminating Employee Deductions ............................................................................................ 5
Termination Check-Off List ....................................................................................................... 8
Terminating the Employee's Record ........................................................................................... 9
Effect of Termination Status ..................................................................................................... 10
Available Reports...................................................................................................................... 10
Internal Control ............................................................................................................................. 10
Internal Control ......................................................................................................................... 10
Records Retention ......................................................................................................................... 10
Time Period............................................................................................................................... 10
DOA Contact ............................................................................................................................ 11
Subject Cross References .............................................................................................................. 11
References ................................................................................................................................. 11
Office of the Comptroller
1
Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Overview
Introduction
When an employee leaves employment with an agency, either through
transfer to another state agency, termination of employment, retirement, or
death, certain procedures must be completed prior to termination of the
employee in CIPPS. If proper termination procedures are not followed,
incorrect payments, incorrect reporting of state and federal taxes, and
improper CIPPS file maintenance can occur. This topic provides guidelines
for making final payment(s) to terminating employees and terminating their
records in CIPPS.
Procedures
Discontinuing
Semi-Monthly
Pay
In order to ensure that the employee who is terminating or being severed does
not receive their regular salary in addition to any final payments, the
employee's TIME CARD STATUS field on H0BID should be changed to a
value of 0 (Non-Auto). This action is systematically performed by the
PMIS/CIPPS automated update and reflected on the Report U082,
PMIS/CIPPS Update Listing.
Political
Appointee
Severance
Payments
When political appointees separate from State Service, the Secretariat will
inform the agency of any severance payment(s) due. These severance
payments will be made using Special Pay 013, SEVR PAY. Contact DOA to
request set up of the Special Payment on the agency’s company header prior
to paying.
Involuntary
Separation
Severance
Payments
The Department of Human Resource Management Policy 1.57, Severance
Benefits, in conjunction with DHRM Policy 1.30, Layoff, outlines the
policies pertaining to severance benefits.
Severance payments for involuntary separation, whether bi-weekly or semimonthly, must be processed semi-monthly using Special Payment 031, INV
SEP.
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Office of the Comptroller
2
Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Procedures, Continued
Severance
Benefits
Deductions
Depending on the type of deduction involved and central agency policy,
payroll deductions for terminating employees may require adjustments. Such
adjustments may be made through deduction overrides (see Topic 50605) or
deduction refunds (see Topic 50705).
After the final payment is made to the employee, all deduction frequencies
must be set to "00". The following table provides termination processing
options related to the most common payroll deductions:
Deduction
Healthcare
Dependant Care,
Medical
Reimbursement
Account and Flex
Admin Fee
Optional Group Life
Deferred
Compensation
403(b) Annuities
Miscellaneous
Insurance
Severance Procedures
Employees may continue to receive health insurance
coverage for a period of 12 months from the effective date of
separation. While the employee continues to receive
severance payments, the agency and the employee pay their
respective share of the healthcare premium.
Through the Automated Healthcare Reconciliation the
agency will be charged the full premium and must recoup the
employee share outside of CIPPS. Employee payments are
due by the 1st of the month of coverage.
While receiving severance payments, contributions to
Flexible Spending Accounts may continue on a pre-tax basis.
Subsequently, Medical Reimbursement Account
contributions must be made on an after-tax basis under
“Extended Coverage” rules, but contributions cannot
continue for Dependent Care. Employee payments are due
by the 1st of the month of coverage.
Since Group Life remains active in CIPPS, OGL may
continue to be withheld from severance payments. Once
severance payments cease, either the employing agency or
the employee must notify the vendor to direct bill the
employee for the monthly premiums due if continued
coverage is desired.
Deferred Compensation cannot be withheld from severance
payments.
May continue to be withheld but there is no cash match.
Upon request by the employee, may continue to be withheld
from the severance benefits. Once severance payments
cease, the employee must notify the vendor to direct bill the
employee for the monthly premiums due if continued
coverage is desired.
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Office of the Comptroller
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Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Procedures, Continued
Severance Benefits Deductions (continued)
Deduction
Retirement
ORP
Group Life
Retiree Credit
(HIC)
Long-term
Disability
Court-ordered
Withholdings
VEST/VPEP
CVC
Severance Procedures
Contributions for retirement and OPEBs (other postemployment benefits) are owed based on the employee status
as of the first working day of the month. If the employee is in a
severed status as of the first working day of the month, only
group insurance continues. Put a “G” in the “Group
Insurance” field on HMCU1 to continue calculation of Group
Life only. The Retirement Code on HMCU1 should only be
updated to “LT” once all severance benefits (not payments)
have been exhausted.
Severance pay is not creditable comp and ORP retirement
should not be calculated based on severance pay.
Group life insurance benefits continue for 12 months from the
effective date of separation. For purposes of maintaining the
VRS record for these employees, the group life insurance
should continue to be reported through CIPPS. Imputed Life
must continue to calculate for the employee receiving the life
insurance coverage. This is accommodated through the use of
a “G” in the “Group Insurance” field on HMCU1. (deleted
old information)
The retiree credit (health insurance credit) must be deactivated
at the time of the severance. This is accommodated through
the use of a “G” in the “Group Insurance” field on HMCU1.
The long-term disability deduction must be deactivated at the
time of the severance. This is accommodated through the use
of a “G” in the “Group Insurance” field on HMCU1.
Court-ordered withholdings are still in force for any payments
the employee may receive after severance and must be
honored.
May be withheld from severance payments.
May be withheld from severance payments.
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Office of the Comptroller
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Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Procedures, Continued
Final Payments
Final payments to terminating employees should be issued on the payday following
the last period worked. Final payments include any additional regular, overtime,
shift, or on-call pay due the employee for hours worked. Final payments also
include the monetary value of the employees' annual, sick, and/or compensatory
leave balances. See DHRM Policy Nos. 3.10, 3.15, 4.10, 4.55, and 4.57 for more
information concerning employee eligibility to receive payments for compensable
leave balances. Typically, leave balances are not paid out until the employee has
exhausted severance payments.
All non-paid, taxable benefits (e.g., moving and relocation, meals, company car,
non-cash awards, etc.) should be processed before issuing the final payment. The
final payment may also be the agency's best opportunity to collect additional
premiums, recoup travel or other advances or other employee debts (if written
authorization from employee is on file), or to complete a deduction refund. If this
does not occur, manual adjustments to the employee's masterfile records may be
necessary or the agency may have to collect any additional payroll taxes that may be
due from the employee pursuant to the adjustment.
Leave Balances
Terminating employees’ leave balances should be audited and all compensable leave
balances paid to the employee prior to the termination of the employee in CIPPS.
Reference CAPP Topic No. 40205, Establishing/Maintaining Leave Records.
Note: When an employee is placed in a terminated status (“3”) on H0BES the leave
balances will be zeroed overnight.
Terminating
Employee
Deductions
Depending on the type of deduction involved and central agency policy, payroll
deductions for terminating employees may require adjustments. Such adjustments
may be made through deduction overrides (see Topic 50605) or deduction refunds
(see Topic 50705).
After the final payment is made to the employee, all deduction frequencies must be
set to "00". The following table provides termination processing options related to
the most common payroll deductions:
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Office of the Comptroller
5
Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
50320
TOPIC
DATE
TERMINATIONS
September 2014
Procedures, Continued
Deduction
Healthcare
Termination Procedures
Employee terminates mid-month - complete the monthly contribution.
Override the deduction on the last regular payment or take the
deduction from the leave payouts.
Employee terminates at month-end - no further action is necessary
unless the employee owes premiums for a previous period that would
require an override.
Once final payment is made, update the HMCU1 membership type
field to an “E” denoting a terminated status.
Dependant Care
Reimbursement
Account (DCRA)
Medical
Reimbursement
Account (MRA)
Flex Admin Fee
Deferred
Compensation
Miscellaneous
Insurance
403(b) Annuities
Parking
See note below on Extended Coverage.
Complete the monthly contribution. Override the deduction on the
last regular payment or take the deduction from the leave payouts.
See note below on Extended Coverage.
Deferred Compensation can be withheld from leave payouts but there
should be no cash match.
Miscellaneous insurances are monthly contributions; where necessary,
override the deduction on the last regular payment or take the
deduction from the leave payouts. Also, lump sum contributions for
annuities can be taken from leave payouts if permitted in the Plan
Document, but there is no cash match.
Determine that all appropriate parking deductions have been made. If
necessary, override the deduction or take the deduction from the leave
payouts.
NOTE: “Extended Coverage” elections are handled outside of the payroll system
(e.g., healthcare, optional group life, MRA).
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Office of the Comptroller
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Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Procedures, Continued
Deduction
Retirement
Termination Procedures
Contributions for retirement and OPEBs (other postemployment benefits) are calculated on the employee
Long-term Disability CONTBASE. They are owed for the full month based on
employee status as of the first working day of the month.
Amounts for the full month should be taken unless there is
Retiree Credit (HIC)
not enough to cover the employee-paid deductions. In that
Group Life
case, nothing is taken for either employee or employer. Any
amounts previously deducted for that month are refunded
and service credit should be removed from VNAV.
Optional Group Life Complete the monthly contribution. OGL can only process
if Group Life is active.
ORP
Contributions for ORP should be calculated based on final
creditable compensation paid to employee.
Court-ordered
Court-ordered withholdings are still in force for any
Withholdings
payments the employee may receive after termination and
must be honored.
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Office of the Comptroller
7
Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
50320
TOPIC
DATE
TERMINATIONS
September 2014
Procedures, Continued
Termination
Check-Off List
It is recommended that agencies develop a termination check-off list to ensure that all
information is complete and accurate before terminating the employee. The check-off list
developed for agency use should include the following:
Regular Pay
YES
NO
Employee Non-Auto on H0BID
Employee due Regular Pay
Employee due Overtime Pay
Employee due Shift Pay
Leave/Special
Payments
Annual Leave Balances
Sick Leave Balances/Disability Credits/TSLB
Compensatory Leave Balances
On-Call Leave Balances
Overtime Leave Balances
Reportable Meals
Non-cash Awards
Company Vehicle
Leave transactions keyed and balances reconciled
Miscellaneous
Collections
Must have written authorization from employee
Outstanding Travel Advances
Outstanding Uniforms, Badges, Keys, etc.
Deductions
Healthcare Override Required
Healthcare Refund Due
Medical Reimbursement - Monthly Override
Dependant Care - Monthly Override
Flex Admin Fee
Optional Group Life - Monthly Override
Deferred Compensation/Annuities – Lump Sum Override
Misc. Insurance Deductions - Monthly Override
Parking - remittance complete
Court Ordered Withholding - required on payments
Deduction Frequencies Turned Off
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Office of the Comptroller
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Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
TOPIC
DATE
50320
TERMINATIONS
September 2014
Procedures, Continued
Terminating
the Employee's
Record
After final payments are made and voids processed, the employee masterfile
record on H0BES can be updated to reflect the terminated status as follows:
Employment
Status
Enter a value of "3" indicating the employee is terminated.
This will cause all leave balances to revert to zeroes
overnight.
Termination
Code
Enter the value indicating the reason the employee is leaving
the agency.
VALUES
1
2
3
4
5
Termination
Date
EXPLANATION/USE
Death
Discharged
Retired
Transferred
Resigned
Enter the effective date of the termination. Note: The
Termination Date is provided on the Report U082,
PMIS/CIPPS Update Listing, but is not systematically
entered.
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Office of the Comptroller
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Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
50320
TOPIC
DATE
TERMINATIONS
September 2014
Procedures, Continued
Effect of
Termination
Status
When the employee status is changed to terminated, CIPPS:
Available
Reports
There are a number of reports available to help agencies track employees who
have terminated and identify the period termination occurred. Reports of
terminated employees who have deceased pay but are not coded as deceased,
and employees who are coded as deceased but do not have deceased pay are
also available.
•
•
•
Automatically changes the payroll frequency to 99 (terminated),
Turns off any direct deposit checking deduction(s), and
Zeroes any remaining leave balances for the employee overnight.
Internal Control
Internal
Control
Agencies must verify that CIPPS information concerning terminating
employees is complete, properly authorized, and entered accurately into the
system. Fiscal officers must ensure that all payments have been properly and
accurately issued.
Records Retention
Time Period
The Input Transaction Listing, Report 1001, and the Transaction Batch
Balance Summary, Report 1005, must be retained for 60 days. All other
reports should be retained for five (5) years or until audited, whichever is
later. Agency policy and procedures determine the retention of the related
agency source documents/records. See CAPP Topic No. 21005, Records
Retention and Disposition.
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Office of the Comptroller
10
Commonwealth of Virginia
Volume No. 1—Policies & Procedures
Function No. 50000 —Payroll Accounting
Section No. 50300—
Establish/Maintain Employee Profile Information
TOPIC NO.
50320
TOPIC
DATE
TERMINATIONS
September 2014
Contacts
DOA Contact
Director, State Payroll Operations
Voice: (804) 225-2245
E-mail: [email protected]
Payroll Business Analyst/Trainer
Voice: (804) 225-3065; (804) 225-2004
E-mail: [email protected]
Subject Cross References
References
CAPP Topic No. 21005, Records Retention and Disposition
CAPP Topic No. 40210, Establishing/Maintaining Leave Records
CAPP Topic No. 50605, Tax and Deduction Overrides
CAPP Topic No. 50705, Employee and Tax Masterfile Updates
Office of the Comptroller
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Commonwealth of Virginia